Commentary on how China and the world are adapting to each other -- or not.

April 25, 2011

Neat Reading: From smart phones to Huntsman's farewell address

I've been trying to catch up on reading and lately came across some interesting stuff:

1) David Wolf, writing in Silicon Hutong, has a nice piece analyzing the burgeoning standards war for smart-phone operating systems. Baidu just announced it will soon offer its own version in an already crowded field. There are at least seven globally relevant smart phone operating systems, and there are three others available in China, offered by China Mobile, China Unicom, and Kai-fu Lee's Innovation Works. Wolf notes that all this competition creates consumer confusion, but he points out that only 7% of mobile subscribers in China have a smart phone, and hence, in the Chinese context it makes sense for there to be a period of operating system competition.This contest over smart phones is similar to the old conflict over video player formats -- SVCD, CVD, EVD, etc. And at least from what we know, the initiative for the contest appears entirely commercial; there may be government subsidies lurking somewhere, but the inspiration seems to originate in the creative minds of business executives, not bureaucrats.

2) The US-China Economic and Security Review Commission (USCC) held a hearing on trends in Chinese foreign policy on April 8. The most interesting panel from my perspective was on "New Interest Groups in Chinese Foreign Policy." Although there's some debate about what constitutes a "real" interest group" as opposed to a branch of the Chinese regime, the three panelists collectively demonstrate that Chinese companies, banks, and bloggers are playing both a direct and indirect role in the policy process. This trend is driven by globalization, the spreading interests of Chinese industry around the world, and technological trends that make it easier for all of us to join the public sphere (my word, not theirs).

3) The USCC also just issued a report with its take on China's Indigenous Innovation policies. Although there are worries about China using a variety of policy levers to ply technology knowhow from foreign hands, the most interesting thing about the report is that it is quite skeptical that China's policies will lead to extensive innovation. If so, foreign firms need to grab hold tight of their IPR now, but this policy initiative is not the long-term threat many worry about.

This reminds me of an interview a few years ago. An executive from an American telecom firm told me that despite the headaches, some in his firm want China to continue its top-down policies to promote innovation because they are so unlikely to succeed; if the Chinese government were to actually be a much greater promoter of genuine innovation, through reducing barriers to market entry, encouraging non-state financing of product development, reforming the education system, etc., then Chinese industry would present a much greater challenge to his company.

4) Two different takes on Huawei and Chinese telecoms abroad: One is from Bloomberg, highlighting the importance of China Development Bank's $30 billion line of credit to Huawei. The second is a piece on the presence of Huawei and ZTE in the Middle East written by William Foster and Hannah Thoreson. Foster and Thoreson see Huawei and ZTE as commercially driven companies, but they highlight how their Internet filtering technology has been widely adopted across the Middle East. "Taking advantage of security tools and techniques developed in the Chinese market," they write, "Huawei and ZTE help their overseas partner telecom companies fashion networks that meet the information control needs of their domestic governments." Not surprisingly, the companies haven't run into the same kind of scrutiny they have faced in the United States and India.

5) On April 6th, American Ambassador to China Jon Huntsman gave what was billed as a "farewell speech" in Shanghai. It stands out for both his commitment to cooperative solutions to address thorny problems in the relationship, but also his frustration with the limits on civil liberties in China that has made it harder to have an open conversation between the two countries, which he suggests helps explain the continuing misunderstanding and distrust. I came across a thoughtful Chinese response to the speech in Wen Hui Pao penned by Guo Xuetang, a professor at the Shanghai University of Political Science and Law. Although Guo also wants the two countries to reduce misperceptions and find ways to peacefully co-exist and cooperation, he sees the burden for change as on the American side. Americans need to remember, he says, that China is recovering from over a century of mistreatment from the outside world; moreover, China is a larger powerful country that deserves America's respect, but it is still developing, and hence, its international responsibilities must remain limited. This certainly sounds self-serving from an American perspective, but it is not an uncommon view in China. The question is whether there is space for imagination in both countries to find common group: Can Chinese recognize that an American call for great liberalization in China is not part of a conspiracy to contain China but is actually suggested with China's interests at heart? And can Americans recognize that given China's history and American deep intervention in many countries around the globe that Chinese understandably might see the various elements of American policy toward China as part of a self-interested plan to keep the US on top?